Even the staunchest admirers of corporate CEOs — you know, the star-struck junior executives who buy the ghost-written biographies and how-to-manage books — will have to admit that there's something downright cathartic about seeing oil company executives grilled by a congressional committee when gasoline prices hit $4 per gallon.
Try as they might to defend $35 billion in profits in the first quarter alone, the CEOs presented a thoroughly unconvincing case for why their industry should be subsidized through tax breaks. "Don't punish our industry for doing its job well," said Chevron's John Watson, who clearly prefers to see his industry stick it to consumers instead.
Was it a dog-and-pony show, as Sen. Orrin Hatch predicted from the start? Absolutely. But sometimes, the country needs a certain amount of pageantry to make a point. And several were made abundantly clear.
The first is that none of the gentlemen who endured the Senate Finance Committee hearing yesterday set the prices at the pump. Oil is a global commodity, and when demand worldwide increases, the prices are bound to rise. So score one for the oil companies, as they are no more villainous than any other corporation looking out for shareholder interests.
But their arguments that without tax breaks they would lose the incentive to explore for new energy options went over like bosh from the mouth of a West Texas shavetail. What, tens of billions of dollars in potential profits isn't good enough without the government adding some kind of sweetener to your $100 barrels of black gold?
That's just greedy, and with the nation facing a debt crisis, it's downright immoral. To be talking about trimming Medicare and Medicaid — basic health care for seniors and the poor — while preserving tax breaks that cost the federal treasury $21 billion annually is just beyond the pale.
Make no mistake, repealing this blatant example of corporate welfare won't reduce prices at the pump, but it won't raise them either. Just as the executives noted, oil is a global commodity, and bigger forces are at work than the U.S. tax code. That's why opening up more of the East Coast to offshore drilling is a fool's errand as well — even by the most optimistic estimates, it's a drop in the bucket.
But $21 billion is still $21 billion, and deficit reduction can't be just about squeezing the weak and vulnerable. It needs to be about giving a little shave to the nation's fat cats as well. Fairness demands that sacrifice be shared.
Naturally, Republicans will claim this amounts to a tax increase and will cost energy-industry jobs. Earlier in the week, House Speaker John A. Boehner continued his efforts to frame deficit reduction in terms of spending cuts only. "With the exception of tax hikes — which will destroy jobs — everything is on the table," he told the Economic Club of New York on Tuesday.
Of course, it could be that the GOP will recognize that repealing a tax break is not the same as raising taxes. Certainly, House Republicans did so last week when they voted overwhelming in favor of legislation to curb abortions by reducing the income tax deduction for private health care insurance plans that cover them. You can bet not one Republican would label that as a tax increase on the American people.
Thursday's dog-and-pony show may not produce much other than a bit of guilty pleasure. Oil companies have too much clout in Washington to expect a repeal of their tax breaks to pass a Senate filibuster, let alone win House approval.
But it does give Democrats a bit of ammunition as Congress continues to debate the debt ceiling and deficit reduction this summer. Republicans have clearly decided that oil companies are a protected class in this country. If gasoline prices continue to rise, there will no doubt be a political price to pay for that shortsighted stance.